As far as I know the issues under medium trust are the same for folder based or host named based sites.
Possible theme issues.
Probable search index issues. Because of the lock directory setting I "think" all sites would write to the same search index and therefore searching in any site will find pages in other sites. Not 100% sure of this, if anyone has time to test and confirm this it would be helpful. You could live without the search feature and remove the search link from layout.master file of skins and delete the /SearchResults.aspx page to mitigate this. I've made a note to myself that I should implement a web.config setting for disabling search that would automatically remove the search link and disable the search page. I will try to get that done in the next version.
The file system path is irrelevant. What is relevant is that the IIS web site points to the folder where mojoportal files are, not to a folder above it.
Other than medium trust issues which I believe are the same in both scenario, folder based vs hostname based sites have various pros and cons as discussed in the documentation, such as with folder based sites you could secure all sites with a single SSL certificate because they share the same domain.
Hope it helps,
Joe